China Won’t Provide Big Stimulus, PBOC Adviser Song Says

China Won’t Provide Big Stimulus, Central Bank Adviser Song Says
China’s industrial production accelerated in September. Photographer: Nelson Ching/Bloomberg

China’s government won’t provide big economic stimulus and a strong rebound in growth is unlikely, said Song Guoqing, an adviser to the People’s Bank of China.

Local-government investment plans probably won’t materialize quickly because they’re reliant on the central government and banks for funding, Song said in a speech at Tsinghua University in Beijing yesterday.

“I have the desire to drive my private jet, but that doesn’t mean I can” fly one, Song said. “The same goes for local governments’ ambitious investment plans.” Still, slowing inflation gives China’s central bank room for “tweaking” monetary policy, said Song, an academic member of the central bank’s monetary policy committee.

China’s industrial production, retail sales and fixed-asset investment accelerated in September, reducing the urgency for added stimulus to support the economy after a seven-quarter slowdown, according to data released yesterday. Gross domestic product rose 2.2 percent in the third quarter from the previous three months, a four-quarter high.

Inflation last month was close to the slowest pace in two years and producer prices fell the most since 2009, government data showed on Oct. 15, giving authorities more room to ease policy. China’s nine-month fiscal revenue gained 11 percent to 9.06 trillion yuan and fiscal spending rose 21 percent to 8.4 trillion yuan, the Ministry of Finance said yesterday.

“Policy makers in China still have room to act if they need to, both on the monetary and the fiscal side,” said Mark Williams, Asia economist at Capital Economics Ltd. in London. “But as things stand, it is not obvious why Chinese policy makers would want to act forcefully now.”

China’s nominal urban per capita disposable income in the first nine months of the year rose 13 percent from a year earlier to 18,427 yuan, the National Bureau of Statistics said in Beijing yesterday. In real terms, incomes rose 9.8 percent, the bureau said.

“This is not a sign of an economy under a great deal of strain,” Williams said in an e-mail.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE